The final report of the royal commission saw Commissioner Kenneth Hayne recommending that the law be simplified, noting that “exceptions and limitations encourage literal application and focusing on boundary-marking and categorisation”.

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Law firm Gilbert & Tobin believes it should be further applied to tax law, where entities seek to meet the terms of the law rather than its intent.

“The Commission notes that the ‘more complicated the law, the harder it is to see unifying and informing principles and purposes’ and that an important effect of the complexity of the law is that entities meet the terms of the law- that is, a focus on literal application, rather than its intent,” said Gilbert & Tobin partner Muhunthan Kanagaratnam.

“Nowhere is this more true than in the tax law – as tax law is introduced, taxpayers and tax advisers alike work to understand the limits of the tax law and comply with the express words of the law.

“A recent example is that no sooner had the anti-hybrid measures been introduced than the ATO expressed concerns at the schemes that skirt around those provisions,” he added.

“The categorisation of taxpayers into different types of entities with nuanced rules, the classification of gains into revenue and capital with markedly different tax treatment and a vast array of exceptions and concessions (with exceptions to those exceptions and concessions) are further examples of substantive complexity.”

Mr Kanagaratnam noted that while there is an argument for tax law to be complicated to protect government revenue, there is still a case to remove unnecessary complexity, arguing that “complexity is not always needed to achieve the intended objectives”.

“It is incredible to think that we have now had two income tax acts for 22 years, with minimal effort to fold one into the other in that time,” he said.

“What is worse is that we have current law that relies on repealed law for effect, law that relies on concepts that are impossible for professionals to describe and taxpayers to comprehend and law that taxpayers are expected to comply with that has been announced but not even drafted let alone enacted.”

“As has been repeated throughout inquiry evidence, Australia’s tax system is complicated – also detailed in previous tax system reviews – and would benefit from wholesale reform. The system has layers of incremental change and as such, any single change has collateral impacts,” the committee said.